President Trump campaigned on scrapping what he saw as bad deals such as the North American Free Trade Agreement, and he has delivered the United States-Mexico-Canada Agreement (USMCA) to take its place. However, Congress will not vote on the agreement this year.
Reuters reported Senate Majority Leader Mitch McConnell said the new Congress will take up the issue in 2019.
“[USMCA] will be a next-year issue because the process we have to go through doesn’t allow that to come up before the end of this year,” he said. The new trade deal is set for signing on November 30 this year, however, Congress will still need to vote on its approval. Legislators also need to receive a report from the U.S. International Trade Commission (ITC) on the deal’s economic impacts. The ITC will hold a hearing on USMCA November 15.
USMCA is aimed at bringing more jobs to the United States, though Reuters reported many analysts believe such jobs are likely years away from proliferating. The new agreement will require 40 percent to 45 percent of an automobile to be built in countries where workers earn at least $16 an hour. Anything under the wage requirement will not be subject to USMCA duty-free benefits. For Canada, it gives the country protections from any tariffs the Trump administration or future presidents try to place on autos exported to the U.S.
Additionally, 75 percent of a car’s total parts content (by value) will need to come from North America in order to be exempt from import duties, which is up from 62.5 percent today. General Motors and other U.S. automakers will likely have minimal issues meeting requirements, though vehicles like the Chevrolet Blazer, scheduled for Mexican production, may pose an issue.
The agreement will not take effect until Congress ratifies the agreement sometime in 2019.